Old media buying new-ish media, will it make a difference?
Last month Dow Jones bought CBS Marketwatch for about $520m and the Washington Post bought Slate, the Microsoft founded online magazine for an undeclared sum.
The question I have is: Why would two companies that have not made much/any money with online publishing make a success out of buying two online media companies that have not made much/any money publishing online?
One plus one never makes two in such cases, it usually just makes one. If you don’t know how to make money in online publishing, buying another company that hasn’t figured it out either, doesn’t improve your chances of profits. It just means you can lose more money at it than before.
On the Dow Jones/Marketwatch deal: What will be the branding? Will the new Marketwatch be WSJ-lite? Already, there is a wide cultural divide between Wall Street Journal editors and reporters, and Dow Jones wire editors and reporters. You’ll notice that there are few former Dow Jones wire editors/reporters at the WSJ and vice-versa. The pecking order for the Marketwatch staff is perfectly clear. Not a good prospect for staff retention, I would think.
Also, if people leave Marketwatch, how do you recruit reporters to a media publication so low on the Dow Jones internal cultural totem pole, especially with few career prospects to move up/across? Yes, online advertising is going through the roof right now, and that might paper-over a few problematic issues initially. It’s the longer term outlook for the Marketwatch business group that isn’t clear. Getting a decent return on that half-a-billion-plus investment is going to be tough.
Regarding Washington Post buying Slate? Compatible editorial, certainly. But, again, there is a two-tier structure in the making. AP reported that the Washington Post is looking for content for its online site.
Did you know that on the whole, print journalists look down on online hacks? And they will go to great lengths to avoid writing for their paper’s online site if the copy doesn’t also go into the newspaper? Newsprint staff consider themselves a notch or three above online/wire hacks. That is why many newspaper sites use separate staff for print and online.
At the Financial Times, we were the first to have an integrated news and feature desks where the page editors and copy editors for both print and online sat nearby each other. Even so, it took a while to overcome the internal cultural resistance to online news writing by the newspaper hacks.
Publishers of print newspapers and magazines have yet to show ANY prowess in the online media sector. And if they try, they will retreat in a hurry, because they cannot afford to expose their print business model to online.
Print advertising doesn’t have the type of metrics that online advertising possesses. You can't pin an ROI on print advertising the same way you can do it for online. If you offer advertisers a package of print and online advertising, you will gradually lose your print advertisers--unless they are large consumer brands. Why? Because the online advertising clickthroughs will be disappointing (and expensive.) Which means companies will conclude that their print advertising is not reaching their target group--and they will pull all of their ads, print and online.
That's why many print newspaper and magazine publishers risk the continued loss of print advertising if they expose their business models to online advertising. They are trapped within a crumbling business model, IMHO.